hi, everybody. welcome to "on the money." i'm maria bartiromo coming to you today from right outside the new york stock exchange on a beautiful day. it is one for the record books. the market hits new highs after calming words from big ben. and earning season kicks off. is there more room to run for stocks? or are there troubles ahead? plus the wheel deal for getting around cities going green. getting in shape and taking a ride. i'll go for a ride and take my bike and talk bike sharing in the big apple. "on the money" begins right now.

here's a look at what's making news as we head into a new week "on the money." federal reserve chairman ben bernanke gave the markets what they wanted to hear in a question and answer session after a speech this week. bernanke said the economy is still not strong enough to support higher interest rates. >> highly accommodated monetary policy for the foreseeable future is what's needed in the u.s. economy. >> that sent the major indexes higher. the dow and the s&p 500 closing in record territory on thursday. the markets having their best day in about a month. and the nasdaq hit a 13-year high on friday as well. earning season kicked off with a bang this week. jpmorgan chase and wells fargo coming in above expectations welles alcoa. gas prices are about to spike in

prime driving season. expect a jump of 10 to 20 cents per gallon of gasoline. it's because of tensions in the middle east and inventory issues in the united states. barnes & noble trying to read its own future. the ceo resigns suddenly. it's possible the iconic bookstore may once again become a private company. the markets are certainly happy to hear what ben bernanke had to say this week. we also saw the kickoff to the earning season as well. what does it mean for your money and going forward? joining me now danielle hughes and bob doll. thanks so much to you both for joining us. good to see you both. so what a week. we're at a record high for the dow jones industrial average and the s&p 500 this week after bernanke's words. what did you make of the speech?

>> i think ben bernanke put the toothpaste back in the tube. i think he'd like to have earlier speeches back where he perhaps spoke too much. he wants to commission us he's not going to buy $85 billion of bonds every month. but he will only stop or slow down when the economy's good enough. but he said it's not quite there yet. >> what i thought was interesting was when he said the unemployment rate underestimates how bad unemployment is. that gave it away right away. saying, look, we're not near our target. so it may be difficult for us to begin the end of the stimulus in september. >> yeah. i think he had in mind this superstorm sandy which added a lot of jobs to the economy and they're probably temporary. investors are in a run down right now. they love quantitative easing. but they also want the economy to grow which would take away qe. so who do you bet for? that's where we find ourselves.

>> what about earnings? earnings season underway. you had financial companies reporting. jpmorgan, wells fargo. what are you expecting and what do you see so far? >> so far the earnings have been okay. but it's just a few companies. my guess is when the dust settles, earnings will beat expectations yet again because the expectations were pushed into the basement. the question is will revenues be okay? in the first quarter they really weren't. my guess is in the second quarter it's going to be iffy again. >> do fundamentals take over in terms of dictating the market or still all about the fed? >> it is about the fed but fundamentals were important. we've got a depressed outlook on what's going to happen and earnings expectations are down dramatically. companies lowered expectations for going forward. >> and so you -- you're also feeling like fundamentals are getting better? >> i do think they're better. i actually think we're going to be happy -- i think we're going

to be -- we're looking at this cautiously and optimistically, but i do believe that we're going to do better than we thought. >> the evidence keeps getting -- the economy is getting better. we continue to head in the right direction. >> what about interest rates though? the ten-year rate has moved up. in terms of this market moving partly on thought that rates at at rock bottom levels does what change or impact the economy? >> at 2.5 for the ten year treasury, what's the big deal? we'll look back and say rates were plain low. it's the repetitivety. >> i think one of the big stories of the week was oil. at one point above $106 a barrel. gasoline prices moving up over the july fourth weekend. is that going to impact the

economy negatively? >> certainly especially with small business it will impact and the consumer too. they're not going to take as many trips because of the gas. and one other thing with respect to mortgage rates rising dramatically, we're going to see that going forward i think in bank earnings. because refis having going down. >> in terms of investing now, so much money has come out of bond funds. $80 billion or so in the last several weeks. is it right to take money further out of bonds? >> i think too many people have enjoyed a bull market in bopds and think they only go up. for those significantly overweight bonds, yes i would take some money off the table. you need some bonds in your portfolio. the question is do you have enough equities? and many americans don't. that's where the growth has been and will likely continue to be. if we're going to win, that's where you have to be. >> there really are few

alternatives to equities with rock bottom rates where they are. >> exactly right. you can stretch for yield here and there but be careful of your principle. i think where we will get some growth will be in the equity market. >> what are you advising clients to do right now? >> equities. dividend plays. we're seeing small cap and mid-cap as being a possible bump up over the next two quarters. >> all right. we'll leave it there. dani hughes and bob doll on the program. thank you for joining us. up next "on the money," five years after the mortgage meltdown, home prices are up. is the housing market rebound real or for show? we'll take a look. then later, bike sharing in the big apple. we're taking a ride on a city bike. a new program trying to change the streets of america's cities. two wheels at a time.

well, the housing market continues to heat up. places like san francisco, atlanta, las vegas are seeing dramatic increases in prices from growing demand. but is it really a comeback? or are we getting too excited too soon? joining me now on the state of real estate is developer don peoples. he's owner of the peoples corporation. it's great to have you back on the program. >> great to be here. >> home values have been rebounding, right? the numbers look good. they've been rebounding for over a year. inventories shrinking. although fewer people own homes today. what's the state of real estate? >> well, what's happened is a tremendous amount of pent up demand. and so as the pressure from holding down prices and holding down investment in real estate has lifted, the inventory's

gotten absorbed. now what we've had is all this inventory which seemed to be too much bringing us into the recession in 2008 has been absorbed and there's no inventory. prices are rising rapidly. >> now, what about interest rates? we've gone from the low of the 3% to now 4.5% on your average 30-year mortgage. how do you think higher rates are going to impact the market? >> what it does is it serves as a controlling element. interest rates have been the lowest they've been in my lifetime. i remember when i bought my first home in 1987. interest rates were 9.5% and that was a bargain. >> wow. >> i think what's happening now is rates are just controlling the market a little more. >> i think we're going to look back some day and say remember when we could have borrowed at 4.5%. i want to get your take about where we are in terms of the possibility of a bubble. because i recently spoke with former treasury secretary hank paulson. he believes that with the

federal government still insuring over 90% of new mortgages, we could be headed into a new housing bubble. listen to what he said. i'd love to get your reaction. >> if the government is setting the prices on your mortgages through a subsidy, it's not economic reality. and you will get another bubble again. >> are you worried? >> no, not at all. the federal government's always had a role in ensuring mortgages. they've done it through hud, fha, va, and also freddie mac and fannie mae. if you look at new york city, for example, all the mortgages exceed the insurance levels of government type of insurance programs. and they are being driven by high net worth buyers, high income buyers. and they are pulling up the market in gateway cities like new york, miami, san francisco. >> what about that first time home buyer though? with more and more investors buying up real estate, are first

time home buyers getting blocked out of the market? >> they're getting blocked out of the market but for different reason. there's not enough inventory. there's not enough inventory for prior first time buyers to step up to the next level of houses because nothing's been built in the last five to six years. and so we need more inventory at that price point. because right now today it is less expensive to own than rent. >> you're building a big project. we had a project restoring the life insurance building and other developments. tell us about these projects and the opportunity in those markets. >> in tribeca and downtown, what's happening is new york is shifting in terms of luxury housing. downtown now is the highest price point per square foot in manhattan right now. because it offers a great deal of fresh, new energy. and also new inventory. because this is the only place where you can have new inventory right now converting commercial buildings in the residential buildings.

we have a building that's 400,000 square feet, the original new york life insurance headquarters. it's an iconic building designed by stanford white. we're excited about it. we're going to transform that part of eastern tribeca. >> and prices are really going up in that part. what is commercial real estate looking like these days? are prices getting away from people? >> we're getting a shift of tenants. new york is getting high-tech companies. other growth industries are picking up the core downtown or central business district type office space in new york, atlanta, miami, san francisco. as opposed to law firms or financial services industries that have pulled back a bit. >> let me switch gears about asking about the politics that you've obviously been a major fund raiser for president obama. how much responsibility do you think he bears for this gridlock in washington? everybody wants to see both sides get together. >> oh, i don't think -- i think gridlock was here before the president got here. and it got more intense once he

got into washington. but the gridlock in washington started back when newt gingrich in the mid-1990s had the contract with america and when the republicans took over the house of representatives. that was when a deeply partisan approach came about. and that's just perpetuated from a prior period of time in the congress or working together, more of a partnership to now. extreme partisanship between the far right and far left. and the president i think is much more to the center than people give him credit for. >> it's unfortunate about that hijacking from the sides. good to have you on the program. >> thank you. up next, we are "on the money." stay with us, we're going to check out new yorkers riding high on bike sharing. we're taking a spin on city bikes with the city's commissioner of transportation. back in a moment. in miami, coca-cola is coming together with latino leaders to support hispanicize, and the adelante movement.

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it's just a wonderful way to see the city. an easy way to commute. >> i use it every day to go to work. you just walk out and you don't need anything. because the bike is right here. i have a helmet. >> about every day i ride about 35 miles. i try and do it during the morning, during lunch, and after work. i love city bike. >> right now i'm going up to 34th and 8th avenue. the only complaint is that up

there after 6:00 there are no bikes left. off to work. >> welcome back. commuters are embracing new bike sharing programs in cities as diverse as minneapolis, washington, kansas city, new york. also joining the craze with city bike, it is the largest program in the country with over 6,000 bikes available. and with me right now is jeanette sonakan. she's the city's transportation commissioner. thank you for joining me. i want to talk to you about this program. why do you think the city bike has become so popular so quickly? >> well, new yorkers love choices and getting around. and new york is ideal for short trips. over half the trips in new york city are under two miles. new yorkers like to do things in a new york minute. so the fact you can grab a bike, take it out, dock it, no hassle, you're done. it's a great new addition to the

transportation system. >> some people have been citing a number of issues for example the docking stations taking up space. some of the car drivers, they're saying that was my parking space before. already crowded areas, technical glitches with the app and the kiosks. the lack of bikes in economically poor areas. is the department working on some of these? what are you doing to alleviate some of these critics? >> well, the system has been used a million trips. new yorkers have taken a million trips on citi bike. there are over 180,000 members. so when you take a look at those numbers, people are clearly voting with their pocketbooks and pedals. the important piece to remember is this system was designed by new yorkers for new yorkers. we had the largest public participation of any transportation project in history. 400 meetings, 65,000 people made

suggestions about where the stations should go. and actually got down with maps and figured out where they went. so we've taken less than 1% of parking spaces for the program. you can see the demand. the other piece that's great to see is people who have ridden 2.5 million miles since the program has launched. which is great for your figure. >> tell me about it. i love biking. >> they've burned off some 178,000 big macs or pints of cherry garcia ice cream. >> that's a good way to analyze it. what happens in the wintertime with the docking stations? >> new york city is a 24/7 town, 365 and these bikes are available all year round. >> they are available. so let me ask you about the economics of it. the citi bike, how does it plan to generate revenue?

>> the program is 100% privately funded. no taxpayer dollars are associated with the program. we have $47 million sponsorship package from citi bank. so they paid for the entire program. so it's really free to new yorkers. and you're already seeing the uptick. the annual membership is just $100 which is less than the cost of a monthly metro card. and you can take it for the day for $10. it's one of the best deals in down. >> a helmet is not required. >> it's not required, but we strongly encourage it. the helmet you have there is one of the 100,000 helmets we passed out for free to new yorkers. when you sign up for an annual membership, you get a key to unlock the bikes and comes with a $10 discount for a bike at a bike store. >> have there been issues?

because you recommend it, but it's not required. >> actually, in all of the million rides we've had, there have only been three injuries. none have been major. what we're seeing is as more and more people are biking, our streets are getting safer and safer. so the streets of new york city are the safest they've been in the history of the city of new york. and so it's great to see that with more bike lanes, more people biking, it's safer for pedestrians, it's safer for cyclists and drives. >> just to follow up on the winter months, you said it's a 24/7 city, new york, and it is. but when it's snowing out, will they stay in the docking stations? >> they'll stay. there are specific service level standards to meet. to make sure the bikes are in working repair and are shovelled out. >> very good. that leads to jobs of course. great to have you on the program again. i'd like to take a spin. should we do that at the end of the show?

>> let's do that. >> we are going to take a spin, but first let's look at the news this week that will have an impact on your money. that's next. back in a moment.

for more on our show and our

guests, check out the website otm.cnbc.com. look for me on twitter and google plus. first let's look at the headlines to look at this week. we have a slew of financial companies reporting earnings for the second quarter including goldman sachs, bank of america, morgan stanley, and american express. other heavy hitters to watch, google, ibm, johnson & johnson, and general electric. on monday retailers will announce monthly sales for the month of june. on wednesday we'll get the housing starts report out for the month of june. as well as the beige book report giving the snapshot of the economy from different regions throughout the country. also on wednesday, we will see a kickoff to two days of testimony by federal reserve chairman ben bernanke that of course on monetary policy and he speaks before congress. and that's the show for today. thanks for being with us. join me next week and i will see

you next weekend. before we go, we're going to take a little ride. let me get back and connect with jeanette. you got my helmet? >> got your helmet. >> thank you so much. awesome. nice. let's take a little ride. >> take a little ride. >> just go right down there. >> right. you can see these are adjustable seats. >> i should not have worn by high heels. >> they're perfect. you can hook right in. >> all right. got it. >> you got your bell here. >> okay. got the bell. >> and your gears. >> yep. here's my brakes. looking good. >> right. ? you could have little bike shorts on underneath. >> you must wear biking shorts under all your outfits. >> i do. >> that's awesome. this is nice. this is a nice ride. it's sturdy.

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